This year's State of the Union Address proves once again that
you can't teach an old dog, or perhaps a New Democrat, new tricks.

For the third year in a row, President Clinton has called for
an increase in the minimum wage. Predictably, he invokes the populist
rhetoric that the minimum wage must be raised to give working
families a "decent living wage." And as before, his
argument is riddled with errors.

The effects of raising the minimum wage are no longer an enigma.
While the Administration, usually in the form of Labor Secretary
Robert Reich, sporadically trots out tattered and discredited
studies citing the purported salutary effects of a minimum wage
hike, the overwhelming number of studies have concluded that the
deleterious effects of minimum wage hikes far outnumber the positive
ones. Indeed, a University of New Hampshire poll of the nation's
economists shows that nearly 80% acknowledge that minimum wage
hikes cause job losses.

The effects of a minimum wage hike are particularly devastating
to black youths, whose unemployment rate exceeds 65% in some areas
of the country. Forty years ago, when Jim Crow was alive and well
but before substantial increases in the minimum wage, the unemployment
rate for black youths was virtually identical to that of white
youths. But with the rise in the minimum wage, there has been
a rise in the unemployment rates of black youth.

The reason is not complex. An increase in the minimum wage
displaces unskilled or low-skilled workers whose labor is not
worth the new arbitrary wages mandated by the government. The
displacement affects not only those earning the minimum but those
whose wages are bumped upward by the new minimum. A disproportionate
share of the unskilled workforce consists of black teens.

At least one analysis has concluded that total job losses from
minimum wage hikes may not be as great as some suspect. But even
if that is the case, more recent studies reveal several phenomena
nearly as disturbing as aggregate job loss.

For example, Kevin Lang of Boston University found that minimum
wage hikes caused unskilled or low skilled adults to be supplanted
by (possibly more educated) teenagers in less need of the income.
Consequently, the displaced adults often end up on welfare. In
fact, a University of Wisconsin study found that welfare recipients
in states with recent increases in the minimum wage spent over
40% more time on welfare than recipients in states with no increase.

Moreover, Dr. David Neumark of Michigan State University has
found that minimum wage hikes also significantly alter the composition
of the entire teen workforce. In a review of state-level minimum
wage data from 1979 through 1992, Dr. Neumark concluded that raising
the minimum wage to the $5.15/$5.25 hour level advocated by the
President would have a number of adverse effects upon unskilled
teens.

First, the general effect of the hike increases the likelihood
that unskilled teen workers will be displaced by more highly skilled
teens. Teens still in school may leave to find work when the minimum
increases, bumping their less educated brethren in the process.

Second, the number of teens working while in school decreases
by 8%-15%. Rather than straddle both work and school, teens leave
school altogether to pursue the higher minimum wage.

Finally, the domino effect of the displacement increases the
number of teens who are neither working nor in school by up to
20%. This is because the new minimum has priced unskilled dropouts
out of the market.

The pernicious effects of a minimum wage hike are most acutely
felt among black youths. An increase such as that suggested by
the President would not only produce a dramatic rise in the number
of black youths leaving school to embark upon an unsuccessful
job search, but it also causes the number of black teens who are
neither in school nor working to skyrocket. The reason is plain
to anyone not preoccupied with attracting potential voters: a
higher minimum lures those with better skills into the job market
and creates barriers to entry for those without skills.

It's time the Administration stopped pulling the minimum wage
rabbit out of its hat. It only makes jobs disappear.

Peter Kirsanow, a member of the national Advisory
Council of Project 21, is a labor lawyer in Cleveland and serves
on the Board of Directors of the Center for New Black Leadership.

Note: New Visions Commentaries reflect the
views of their author, and not necessarily those of Project 21.